APWU Safety and Health Specialist Criticizes USPS OIG Report
An audit report conducted by the Postal Service’s Inspector General’s Office (OIG) on the USPS Health and Safety Program, released Nov. 14, is limited in both scope and depth and is thus of little value in assessing the agency’s overall efforts to promote a safe workplace, the union has determined.
“The report should not be viewed as a comprehensive audit of the Postal Service’s safety program but rather as an unfocused snap shot of the Postal Service’s application of a piece of its safety program,” said APWU Safety and Health Specialist Corey Thompson.
“Based on the identification of numerous hazards and problems found by study, in such a small sampling of the overall USPS safety program the report can only be viewed as evidence that many more unsafe conditions would be discovered by the OIG if it were to perform a more comprehensive audit,” he added.
Thompson also noted the OIG did not consult national union officials for their views and expertise, and it overlooked a broad range of electrical and automation related hazards at USPS facilities.
OIG Issues Report on USPS Health and Safety Program
OIG Audit: USPS Past Network Optimization Initiatives
“This capping report summarizes the results of past U.S. Postal Service Office of Inspector General (OIG) audits conducted on U.S. Postal Service network optimization initiatives between fiscal year (FY) 2004 and FY 2011.”
We determined a valid business case exists for 31 of the 32 AMPs (97 percent) we reviewed. These business cases were supported by adequate capacity, increased efficiency, reduced workhours and mail processing costs, and improved service standards. Read more
USPS OIG Poll: How Far Does Your 44 Cents Go?
From The USPS OIG:
When mailing a letter that weighs about one ounce, the U.S. Postal Service’s 44 cents is one of lowest First Class postage rates. Whether you are mailing a letter locally or sending a greeting card across country, it still only costs 44 cents now, but will increase to 45 cents in January. The graph below compares the U.S. Postal Service’s postage rate with other countries. As you can see, Norway charges the highest rate, which is nearly four times the cost U.S. rate.
Some might feel it is reasonable for the Postal Service to increase rates and charge a fee comparable to those in other countries. On the contrary, others might say the Postal Service’s rate must remain at an affordable level, especially for people with lower incomes. They might also say raising the rate to a level found elsewhere would drive customers away even faster.
What do you think about the current postage rate? Do you think 44 cents is reasonable?
If 44 cents is too low, how much do you think the Postal Service should charge?
USPS OIG Responds to GAO Report
Hmmm… it appears that some members of Congress have been sitting on this GAO report for at least a week. Of course, the report was sent out to GOP-leaning news media to get ahead of today’s spin on the USPS overpayment. The games some people play once they are in power.
USPS OIG sent the following letter to GAO:
We disagree with the major conclusions of the report. Your review focuses on the 1974 law (P.L. 93-349), which is not in dispute. All parties agree that the 1974 law made the Postal Sen/ice responsible for funding the additional CSRS liabilities resulting from pay increases after 1971.
The issue in question surrounds the CSRS Funding Reform Act of 2003 (PL. 108-18) as it pertains to the Office of Personnel Management’s (OPM) share of CSRS liability. Your report fails to recognize how the 2003 law changed the 1974 law. We do not understand your assertion that the “consequence of the 2003 Act was to leave the 1974 allocation unchanged, notwithstanding the removal of the explicit allocation provision.” If. as you state, the allocation provision was removed, it does not seem reasonable to assume the intent of Congress was that the allocation remain unchanged.
In fact, the 2003 law changed the directive to OPM. As the legislative history shows, it was intended to “repeal” the 1974 law (Senate Report No. 108-35, page 6). OPM was required to adopt modern dynamic methods. Dynamic methods dictate that OPM take into account the effect of future salary increases on the total liability. Using these methods, OPM was to capture the size of the postal liability and the respective responsibilities of the Postal Service and OPM to satisfy the liability. Instead, OPM applied dynamic assumptions solely to the Postal Sen/ice’s share of the liability — not to its own share. It appears that OPM failed to follow the 2003 law and now must agree to do so or be compelled by law for a second time.
The current OPM methodology is neither fair nor modern nor does it comply with the 2003 law. We agree with you that action from Congress is necessary to settle this issue once and for all. We believe Congress did just that in 2003. If OPM cannot be convinced of the need to change its methodology, the only alternative is for Congress to compel OPM to act by adding even more explicit reform language to the legislation currently being prepared. Read more
OIG Finds Over $400k In Questionable USPS Purchases On Beer, Sports,Gift Cards
USPS OIG Audit Report – Purchasing Compliance and Imprudent Purchases Follow-Up Audit;
The Postal Service has an increased risk of loss when purchases are made without proper authorization or justification
This report presents the results of a follow-up audit to determine whether purchases complied with U.S. Postal Service policy and whether imprudent purchases were still occurring related to the SmartPay® Purchase Card and select Accounts Payable Excellence (APEX) system transactions since our last audit. Read more
OIG Audit: Conflicts of Interest – USPS Facility Leases and Contract Delivery Services
USPS Audit Report “Conflicts of Interest: Facility Leases and Contract Delivery Services (Report Number DA-AR-11-008)
Federal regulations and Postal Service policies seek to minimize conflicts of interest to ensure that every citizen can have confidence in the integrity of the federal government. Postal Service policies encourage employees to avoid creating the appearance that they are violating the law or ethical standards.
At the end of fiscal year 2010, the Postal Service leased over 24,000 properties that represent about $1 billion2Appendix A in annual rent. During the same period, the Postal Service also maintained 7,797 mail delivery service contracts with individuals at an annual value of $318,658,027.
Our audit determined the Postal Service entered into leases that resulted in financial conflicts.One-hundred seventy of the active properties were leased from current employees with an annual rent value of $490,375. Some pose risks of violations while others give the appearance of impropriety. We identified 1,202 of 24,582 total leased properties that were obtained from current or former Postal Service employees with an annual rent value of $8.2 million. Of these properties, 982 were active leases with an annual rent value of $5.4 million.
Similarly, the Postal Service entered into 78 of the 7,797 total CDS contracts (valued at $3,005,818 annually) with current or former employees that, in some cases, resulted in apparent violations of federal regulations and Postal Service policies. Others also give the appearance of impropriety.
Real Estate Leases – Conflicts of Interest
We randomly sampled 59 of the 1,202 leases that we associated with employees or their relatives. As presented in Table 1, we identified 11 (or 19 percent) with financial conflicts because they were owned by employees who have the authority to exert significant influence in the lease process. These employees consisted of postmasters and their reliefs. For eight of these 11 leases, we confirmed that employees did, in fact, exert significant influence during negotiations in their roles as postmasters.
For example, in one instance the Postal Service decided to move operations from the postmaster’s property due to the poor condition of the facility. The postmaster subsequently solicited community support to discourage the move but once unsuccessful, she was able to lease land for the new post office location. This instance, among others, are apparent violations of Title18 U.S.C. §208 because employees participated personally and substantially in the Postal Service’s decision to lease property they own and represent illegal actions that, in the absence of an approved waiver, are subject to criminal prosecution. We were unable to confirm apparent Section 208 violations for the remaining three leases because there was insufficient evidence in lease files to assess employee participation
In addition, we identified 27 (46 percent) leases that were not conflicts of interest per Postal Service or federal guidelines. However, they give the appearance of impropriety. These lease renewals include former employees who have insider knowledge into the Postal Service’s leasing practices, current employees not assigned to the leased location, and instances where the lessor was a permitted relative of a Postal Service employee. The remaining 21 leases were no longer conflicts of interest due to termination or ownership transfer to individuals other than Postal Service employees.
Apparent violations of Section 208 and federal ethics standards exist because Postal Service policy allows employees or their relatives to lease smaller properties to the Postal Service, self-disclosure of potential conflicts is ineffective, and the Postal Service does not match lessor information to payroll records. For example, in four of the 11 financial conflicts, the lessors did not disclose their relationships with the Postal Service as required.
As a result, we estimate that 119 of the 982 active leases (or 12 percent) are at risk for conflict and 103 of them (or 10 percent) are possible in violation of Section 208. Section 208 does provide exceptions that require obtaining a waiver from the Postal Service’s Designated Agency Ethics Official (DAEO). None of the lease files we reviewed that were subject to Section 208 violations contained a waiver. See Appendix B for our detailed analysis of this topic.
CDS – Conflicts of Interest
Of the 78 delivery contracts with potential conflicts, we confirmed that the Postal Service awarded 15 of 78 contracts (19 percent) valued at $591,210 to current employees.
In one instance a rural carrier associate was awarded a delivery service contract in July 2006 and remained an employee. The employee contractor did not disclose the Postal Service relationship as required. This instance, among others, are not violations of Section 208 because employees did not participate personally and substantially in the contracting decision from which they or their relative received a financial benefit. Rather, these contract awards are apparent violations of Title 18 U.S.C. §440 that prohibits Postal Service employees from entering into contracts for mail delivery and Postal Service policy that does not allow CDS contracting with current employees. Section 440 violations are also illegal actions subject to criminal prosecution.
In addition, we determined that 27 of 78 (35 percent) contracts were awarded to employees within days of separation from the Postal Service. Per discussion with Postal Service contracting personnel, employees were advised to resign before receipt of contract awards. Another 25 contracts (32 percent) were awarded to employees after 30 days of separation from the Postal Service. Although contracts with former employees are not violations of Postal Service or federal conflicts of interest guidelines, they do give the appearance of impropriety and may create the appearance that former employees violated Title 5 CFR.2635.703 by using their insider knowledge of the Postal Service to secure contract awards. This is particularly applicable to the 27 contracts negotiated during the employees’ tenures and awarded shortly after separation. The remaining 11 contracts were not financial conflicts due to contract termination or changes in contractors.
OIG: USPS Must Embrace Culture Of Innovation To Overcome Current Financial Challenges
USPS OIG Audit Report on “Postal Service’s Innovation Process for Competitive and Market-Dominant Products”
To overcome its current financial challenges, the Postal Service must recognize innovation not as the byproduct of an effort to improve operational efficiency only, but as a distinct strategic goal and activity. It must embrace a culture of innovation that begins with the most senior levels of management, understand the process that turns ideas into innovation, and commit to an organizational structure that allows innovation teams to work free from the constraints of day-to-day operations
The Postal Service faces regulatory and market constraints to innovation that private companies do not. For example, it must prove to the Postal Regulatory Commission (PRC) that new products and services will not violate statutory restrictions, will cover their attributable costs,3 and will not create an unfair competitive advantage.4 The Postal Service may not offer loss leaders, defined as goods or services advertised and sold at or below cost,whereas private sector businesses are free to use this business strategy. Despite these external barriers, the Postal Service has introduced some innovations including Priority Mail® Flat Rate Boxes, Intelligent Mail barcode (IMb), Critical Mail, Simplified Addressing, and the Flats Sequencing System (FSS).
While foreign posts have turned to alternate businesses–including banking, investment, and insurance–to address their economic challenges, the Postal Act prohibits the Postal Service from offering non-postal products and services, except for a limited number that were offered before January 1, 2006. In addition, the Postal Service faces challenges to innovation that private sector businesses are not subject to. For example, the Postal Service must prove to the PRC that new products and services will not violate statutory restrictions and will not create an unfair competitive advantage. The Postal Service may not offer loss leaders, whereas private sector businesses are free to use this business strategy. The Postal Service is also required to attribute costs in such a way that new products bear the full cost of research and development, advertising and promotion, and implementation.7
In the private sector, many of these costs are considered overhead. Further, each product the Postal Service offers must bear transaction costs as an individual unit, even though items sold at retail facilities are often add-ons to other transactions with lower incremental costs.
Under legislation proposed in September 2010,the prohibition against offering non-postal products and services would be revised, allowing non-postal offerings that are in the public interest and making use of the existing postal network, thereby giving the Postal Service additional flexibility. The Postal Service would also be permitted to offer services to state and local governments. For example, post offices might provide voter registration and driver’s license renewal.
Need to Effectively Manage Ideas from External Stakeholders
The Postal Service has a system to track ideas for improvements that are generated by Postal Service employees. The eIDEAS program is a web-based application that allows Postal Service employees to submit ideas online or at kiosks located in processing plants. The Postal Service encourages employees to contribute constructive ideas to improve customer satisfaction, generate revenue, increase productivity, and improve competitiveness.13 However, management of that system has been troubled. A U.S. Postal Service Office of Inspector General (OIG) report published in August 2010
Some entrepreneurs seeking to partner with the Postal Service by introducing innovative products or services offered their views regarding obstacles they encountered. During interviews with the OIG, they described a Postal Service culture resistant to change and unresponsive to customers’ needs. We interviewed individuals who attempted to introduce or develop innovations at the Postal Service to obtain feedback regarding their experiences. One individual developing innovative software for the Postal Service noted that management delayed the project so much that it eventually failed. However, several years later, the Postal Service implemented a similar application. Another individual experienced significant delays in obtaining approval for a mailing product that met his customers’ needs and satisfied Postal Service regulations. These entrepreneurs cited further obstacles to innovation, including:
* Guidelines regarding whom to approach with new ideas or improvements to existing products and services are not transparent and easily identifiable.
* The Postal Service dictates conditions to customers rather than listening to customers’ suggestions.
* The Postal Service discourages innovation by requiring innovators to present ideas without providing assurance that either the idea will be safeguarded or the innovator compensated.
The Postal Service resists adopting innovations suggested by customers if those innovations do not fit seamlessly into current operations. Instead, it requires customers to modify their innovations to meet all current standards.
* A process has not been established for approving new products and services or improvements to existing ones.
* Feedback regarding approval of products and services is not presented timely.
* Innovators within the Postal Service tend to get pushed out.
* There is an “us versus them” attitude.
* The Postal Service does not reward risk takers.
* The Postal Service, in certain situations, prohibits vendors from meeting with engineers to determine why products fail tests.
While the Postal Service is making an effort to engage a culture of innovation, the lack of a comprehensive innovation strategy including systemic tracking and management of innovative ideas has the effect of both limiting strategic vision and creating an organization that responds slowly to a rapidly changing business and technological environment. To overcome the challenges it faces, the Postal Service must reach beyond its current vision and embrace a culture of innovation that begins with the most senior levels of management, understand the process that turns ideas into innovation, and commit to an organizational structure that allows innovation teams to work free from the constraints of day-to-day operations. Without such a comprehensive innovation strategy, the Postal Service jeopardizes its long-term viability through loss of business to electronic diversion and industry competitors. See Appendix B for our detailed analysis of this topic.
We recommend the vice president, Government Relations and Public Policy:
1. Continue to work toward legislative changes that will allow the Postal Service more flexibility to introduce new products and services.
We recommend the president and chief marketing/sales officer and the chief financial officer and executive vice president:
2. Consider a comprehensive innovation strategy, based on the best practices of companies considered leaders in the field that includes innovation teams that are both independent of operations and actively collaborate with outside organizations, or other generally accepted forms of innovation teams. The strategy should also contain a system to support tracking and management of innovative ideas that are generated.
OIG Audit Report on USPS Innovation
OIG: USPS Training..Stay Or Pay?
Should Postal Service employees be required to repay training if they resign before a specified period of time following their training?
The U.S. Postal Service employs approximately 40,000 maintenance craft employees to work in a variety of assignments. Some of these assignments, such as maintenance mechanics, require specific training at great cost to the Postal Service. For example, one training course lasts 13 days and costs $3,325 per employee.
Should employees receiving specialized training sign contracts to remain with the Postal Service for a specified period so that the cost of providing the training can be recouped? Should employees who received training be permitted to leave for more lucrative positions in the private sector as soon as they are certified without compensating the Postal Service? Should such restrictions apply to all Postal Service employees who receive specialized training?
One company requires employees to sign contracts for training programs that are considered expensive and time intensive.
USPS OIG Unable To Determine Why Postal Supervisors Deleted Employees Timeclock Rings
The USPS Office Of Inspector General issued an Audit Report over “Allegations of Inaccurate Time and Attendance Records”
Here is why the report was conducted and some excerpts of what the OIG found:
This report presents the results of our audit of allegations of inaccurate time and attendance records (Project Number 10YG017HR000). Our objective was to assess whether the U.S. Postal Service has adequate controls to ensure the accuracy of employees’ workhours. We are conducting this audit as a result of a congressional request and other inquiries we received regarding postal locations in Salem, OR; Dover, NH; Kansas City, MO; Gahanna, OH; and Gastonia, NC. This audit addresses financial and operational risks. See Appendix A for additional information about this audit. Read more
USPS IG: Postal Service Would Benefit From Its Own Workers Comp Program
USPS IG says Federal Employees Compensation Act (FECA) has become a ‘lucrative retirement plan’
The USPS Office of the Inspector General David C. Williams prepared testimony for April 13, 2011 hearing before the Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy Committee on Oversight and Government Reform House of Representatives on “Federal Employees’ Compensation Act: A Fair Approach? (1:30 PM – 3:30 PM).”
Mr. Chairman and members of the subcommittee, thank you for the opportunity to discuss workers’ compensation issues and reform. The Federal Employees Compensation Act (FECA) requires federal agencies to participate in the Department of Labor’s (DOL) FECA program. DOL bills each agency annually for compensation paid and non-appropriated agencies also must pay DOL an annual administrative fee.
Eligible disabled employees receive 66 2/3 percent (or 75 percent with dependents) of their basic salary, tax-free plus, medical-related expenses. Also, FECA places no age limit on receiving benefits. This is substantially more than other employees receive when they retire. Though unintended, FECA has become a lucrative retirement plan.
The Postal Service is the largest FECA participant, paying more than $1 billion in benefits and $60 million in administrative fees annually, creating a long-term liability of $12.6 billion. As of February 2011, the Postal Service had about 15,800 disabled employees. Over 8,700 were at least age 55, about 3,100 were at least age 65, and about 900 were between age 80 and 98.
Certain aspects of the program make it susceptible to fraud:
* The claimant’s ability to change their story until their claim qualifies;
* The claimant’s ability to hire a physician rather than use a plan physician to assess their injuries and condition;
* The program incentivizes DOL to collect larger fees if they approve more claims and lose budget dollars if they deny them;
* The lack of effective DOL case management; and
* Employers not being allowed to present or respond to evidence at hearings.
DOL has some fraud detection responsibility, but it’s unclear to what extent. They advise agencies to actively manage their own programs, while still charging administrative fees. There is not a clear delineation of responsibility between (1) agency program managers and (2) their OIGs and (3) DOL and (4) its OIG in detecting fraud. Accordingly, there is significant risk that program oversight will be duplicative or not done.
Since October 2008, we have removed 476 claimants based on disability fraud, recovered $83.5 million in medical and disability judgments, and halted significant future losses. In one investigation, a fraudulent claimant received $142,000 in benefits while she was working as a real estate agent, and we had pictures of her hiking and bungee jumping. She even bought a boat named “Free Ride.” Other investigations have found fraudulent claimants working as martial arts instructors, landscapers, hairdressers and mechanics.
Working with DOL is difficult. They control needed documents, but are often not responsive when we investigate cases. Additionally, they do not take timely action when told that a claimant no longer qualifies for benefits. Even when a claimant is convicted, DOL is slow to terminate benefits.
* We gave DOL an investigative report in 2006 which found a claimant was exceeding his limitations. Even though the employee was willing to return to work, DOL did not reduce his benefits until 2011.
* Fourteen months ago we gave DOL an investigative report containing evidence of fraud by a disability claimant and a subsequent medical exam confirmed the claimant was able to return to work with no restrictions. Despite requests, DOL has taken no action and continues to pay benefits.
* Over a 5-year period one claimant submitted $190,000 in unsupported mileage reimbursements that DOL paid without question.
Stress claims in particular are at high risk for fraud. If a doctor sees a correlation between stress and a claimant’s work, the claim is often approved. In one instance, a claimant’s emotional reaction to a change in work schedule was enough for DOL approval.
The OIG also investigates medical providers involved in criminal matters, including disability fraud and we have recovered $78.5 million since FY 2009. Unfortunately, DOL provides no standardized billing guidelines for doctors, making it difficult to hold them accountable for fraudulent billings. If DOL instituted a system similar to Medicare’s, prosecutors would be more inclined to take these cases. From our reviews, the Postal Service would benefit from having its own workers’ compensation program. Savings would be in the areas of reduced administrative fees, accurate assessment of claims by plan physicians, buyout options, mandatory retirements, immediate access to records, and improved accountability over case management.
From our reviews, the Postal Service would benefit from having its own workers’ compensation program. Savings would be in the areas of reduced administrative fees, accurate assessment of claims by plan physicians, buyout options, mandatory retirements, immediate access to records, and improved accountability over case management.
FECA is in need of significant reform. Such reform could reduce the substantial risk for fraud and improve program efficiency and effectiveness, while protecting reasonable benefits for legitimate claimants.